Minimum wage debate centers on jobs and 'bottom line survival'

By Mike Benbow
Business Editor
The Daily Herald


Everett, WA - A recent column on Washington state's minimum wage drew some criticism, mostly from people who thought I was attacking it in general.

The column noted that the minimum wage will rise to $7.16 in January - the highest in the nation.

And it's likely to stay at the top of the heap because voters approved an initiative that calls for automatic annual cost of living increases.

What I thought the column went on to say - what I had intended to be the point - was that the bad side of high minimum wages is that they deter employers from hiring more workers during bad times - just when our economy needs additional jobs.

At least one economist tells me that such a conclusion is rooted in sound theory. That in times with low demand, employers are less likely to hire someone at a higher pay than they would be if they could get one for less.

I would also guess that a lot of people without work would be willing to take one of those lower-paying jobs as a stopgap measure, but that's a little beside the point.

Mike Sells, secretary-treasurer of the Snohomish County Labor Council, challenged my conclusion that the higher minimum costs job, saying he's seen no evidence of that.

"The impact on jobs is generally nonexistent or negligible," Sells said of minimum wage increases. "Sales drive jobs."

Let me say flat out that I can't cite any studies showing that higher minimum wages cost jobs - just anecdotal comments from business owners.

More than one, especially restaurant operators, have said that their profit margins are so low they really have to keep a tight control on the number of employees (many of whom make minimum wage plus customer tips) to remain successful.

While I still believe that business owners are reluctant to hire people if they have to pay a high minimum wage, let me say that I don't begrudge people earning $7.16 an hour.

Sells correctly points out that such jobs often come without health care or other benefits.

"The minimum wage is not a living wage," Sells said. "It's bottom line survival. And even that's questionable."

Sells passed along a study from the Economic Policy Institute that noted that the buying power of the federal minimum wage had eroded significantly over the years.

It's now $5.15 and does not include automatic cost-of-living increases such as the minimums in Washington and Oregon.

The authors of the institute study concluded that other states should also step in to protect the incomes of the lowest paid workers.

Sells and I were having our discussion over lunch, and Sells noted that he didn't relish the thought "of someone waiting on me not having enough to live on."

When it comes right down to it, he said, he'll gladly pay more for a hamburger if it means his server has a better life.

I completely agree.

But I also have to admit that when times are tough, I don't go out to eat as much. And I watch how much I spend.

I suspect I'm not alone.

So that still doesn't help the restaurant owner, for example, who is torn between holding the line on prices to maintain a customer base and raising prices to cover higher labor costs.


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